Further European rate hikes 'very much dependent' on energy costs, Bundesbank chief said

ECB’s Nagel: Energy prices will shape further interest-rate hikes Skip Navigation Markets Business Investing Tech Politics & Policy Video Watchlist Investing Club PRO Livestream Menu Key Points Bundesbank President Joachim Nagel said the ECB’s next moves will depend heavily on energy-price developments. The ECB raised its key interest rate by 25 basis points to 2.5% on Thursday. Nagel said rates are at the upper end of neutral territory but may need to enter “mild restrictive territory.” In this article @CL.1 @LCO.1 Follow your favorite stocks CREATE FREE ACCOUNT watch now VIDEO 11:28 11:28 ECB's Nagel: May move into mildly restrictive rate territory Squawk Box Europe Energy prices will dictate whether the European Central Bank needs to hike interest rates into restrictive territory, Germany's central bank chief told CNBC on Friday. "It's very much dependent on how the energy prices evolve, how the price picture is evolving over the course of maybe the next month," Joachim Nagel told CNBC's Annette Weisbach in an interview, the day after the ECB hiked its key interest rate by a quarter percentage point to 2.5%. He was speaking as oil prices remained elevated, with global benchmark Brent crude and U.S. WTI both trading above $100 a barrel on Friday morning. European gas prices are also under pressure, with Dutch TTF futures hitting the highest level since 2022. Nagel said he believed rates were currently at the upper end of neutral territory — when monetary policy is neither stimulating nor restricting economic growth — but he could not rule out the need to enter "mild restrictive territory." Nagel says energy prices will shape rate outlook Asked whether one or two more hikes were possible in the current cycle, Nagel said: "It's too early to speculate on this. What we see is that energy prices went up last week, now we are close to $110 [per barrel crude oil]." "We saw a lot of volatility over the course of the last month. What we did yesterday is a reflection of our forecast." "It is not clear what are the energy prices doing over the next weeks and months, so I think it is dependent on the energy price development and I will do my assessment when we are coming together the next time," he said. Nagel told CNBC he was not concerned about the relatively low levels of European gas storage heading into winter, adding the situation was not comparable to the energy crisis of 2022-2023 due to greater options for buying LNG. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.